RBC Employee Pricing Mortgage Review

As a formal Royal Bank of Canada employee, I find myself in the unique position to review the RBC Employee Pricing Mortgage currently being offered. As a former RBC employee, I have to say that RBC treats their employees with the utmost fairness, care and respect. With this in mind, I would like to critique this RBC mortgage offering.
As a formal Royal Bank of Canada employee, I find myself in the unique position to review the RBC Employee Pricing Mortgage currently being offered. As a former RBC employee, I have to say that RBC treats their employees with the utmost fairness, care and respect. With this in mind, I would like to critique this RBC mortgage offering.

On the pro side for this mortgage, the rate is actually quite competitive. Although you will not find their employee priced mortgage rate on the RBC website, if you call in to their personal bankers, you will find that they will drop their 5 year fixed rate down to 2.69%. This rate does not compete with the best rates on the market, which are currently as low as 2.49%, though for a larger institutional bank - not bad! The other pro, of course, is the comfort that the larger banks offer. If you are more comfortable in a 'bricks and mortar' branch offering you a place to sit down in your community and have an offering of all financial products, than the bank is your best fit.

On the con side for this mortgage, the penalties to break your RBC Employee Pricing mortgage are insurmountable. For easy figuring, let's assume that you take out mortgage for $250,000, and for some reason (change of employment, family structure, etc) you need to break your mortgage and pay the penalty. If you break your mortgage 1 year into your RBC Employee Pricing mortgage, then your penalty is a whopping $16,516. If you had taken out the same mortgage amount for the same rate of 2.69% with another lender with reasonable penalties, your penalty would be $1,633. Which penalty would you prefer to pay for the same mortgage of the same rate and term? What is even more interesting is that the online RBC penalty calculator does not properly reflect the penalty for this fixed rate mortgage. Only when you call the bank will this news be broken to you.

As mentioned above, RBC is a great employer, I believe one of the best in Canada. Though, the numbers speak for themselves. You are much better off to obtain your mortgage through the mortgage broker channel and receive the mortgage where you receive the best rate AND the best penalty calculation. You wouldn't want to be caught with a $16,633 bill in you hand just for choosing the wrong mortgage.